Does YOUR energy deal have an exit fee? Some new fixed tariffs come with penalties of up to £300
- Fees to leave fixed rate energy tariffs can reach hundreds of pounds
- But many of these deals are uncompetitive, leaving consumers stranded
Many consumers taking out fixed rate energy tariffs are finding that the deals are not saving them any money – and can have exit fees of up to £300 to move away.
Most households in the UK are on variable-rate energy deals limited by the price cap set by regulator Ofgem, with the average home paying around £1,843 a year.
With energy bills predicted to stay high for years to come, many households are eager to take out a fixed-rate energy deal – one that is cheaper than price-capped alternatives, as used to be the case before the energy crisis took hold.
But a new report from the End Fuel Poverty Coalition found that out of the fixed-rate energy deals currently on the market for new and existing customers, only one – from Utility Warehouse – is cheaper than staying on a price-capped tariff.
Underpowered: Many fixed-rate energy deals actually work out more expensive than staying on rates limited by the Ofgem price cap
Meanwhile, there are 337 fixed rate deals already taken out by consumers that are charging them higher unit rates than the price cap.
Many of these deals also have high exit fees that can can be as expensive as £300 per household, adding extra hurdles to switching away from uncompetitive tariffs.
Exit fees are the charge consumers pay for leaving a contract early. The highest exit fee, of £300, is from Outfox the Market.
Three energy firms – So Energy, Utility Warehouse and Ecotricity – have early exit fees on all of their fixed-rate deals.
Just one in twenty (6 per cent) of British Gas tariffs come with no exit fees – and the firm’s average exit fee is £62.
Just 12 per cent of Eon’s tariffs have no exit fees, with the figure being 4 per cent for EDF and 15 per cent for Ovo.
Some energy firms charge no exit fees at all, with almost all tariffs for Good Energy, Octopus and Cooperative Energy having no such charges.
Simon Francis, co-ordinator of the End Fuel Poverty Coalition charity group, said: ‘With energy prices subject to change, customers should exercise extreme caution when thinking about switching and fixing and we would call on companies to waive exit fees so people can switch easily to the cheapest tariff available.’
A Utility Warehouse spokesperson said: “Our best-in-market Fixed Saver 7 tariff allows customers to fix their energy at £59 below the current price cap until November 2024.
‘Our fixed tariffs come with an exit fee should the customer choose to leave before the end of the fixed term.’
How can I tell if a fixed rate deal is a good one?
To work out if an energy deal is cheaper than you are paying now, compare the unit rate and standing charge with what you currently pay. These rates should be included on your bills.
The average home is paying rates limited by the Ofgem price cap, which means 53p a day in electricity standing charges and 30p for gas, while electricity unit rates are 27p per kilowatt-hour (kWh) and 7p/kWh for gas.
The massive variable is what happens with the Ofgem price cap in the future. It might be possible to lock into a cheaper deal now, only to see the price cap fall significantly, leaving you overpaying.
It is also worth looking at any exit fees in case you need to leave a deal early.
What is the future for energy bills?
Ofgem does not make predictions about how the price cap will change in the future, although chief executive Jonathan Brearley has previously warned customers that he ‘can’t offer any certainty that things will ease this winter’.
However, analysts at Cornwall Insight makes energy bill price predictions that are normally very accurate.
Cornwall Insight thinks the typical household will pay £2,032 from January 1, falling to £1,964 in April, £1,917 in July and then rising again to £1,974 next October.
